As US Federal Reserve rate cuts loom, the Singapore REIT (S-REIT) sector is drawing renewed interest from investors.

S-REITs stand to gain through reduced borrowing costs, leading to higher profits and capability to acquire lucrative assets.

However, the impact of reduced interest rates can vary based on individual REITs' debt structures, property categories, and geographical exposure.

This raises the question: should you invest in an S-REIT ETF amid the sector's recovery?

Investing in an S-REIT ETF offers immediate diversification, minimizing the risk associated with selecting the wrong REITs.

For example, Lion-Phillip S-REIT ETF (SGX: CLR) provides exposure to 18 high-quality S-REITs, spanning seven sectors such as industrial, office, and retail, as screened by Morningstar.

This broad-based ETF can mitigate underperformance in individual REITs or specific sectors, thus minimizing negative impacts on your overall return.

Moreover, the ETF delivers an attractive yield of 4.9% (as of last market close), nearly 3% higher than the 10-year average interest rate of the latest Singapore Savings Bond, which stands at 1.93%.

Another reason to invest in an S-REIT ETF is to avoid dealing with equity fund-raising exercises by individual REITs.

Essentially, it eliminates the need to scrutinize proposed acquisitions or allocate more funds to participate in rights issues, which can lead to diluted stakes if acquisitions are not accretive.

When considering which S-REIT ETF to buy, Lion-Phillip S-REIT ETF (SGX: CLR), with a fund size of S$631 million, is the first and largest listed on the Singapore Exchange.

Other notable ETFs include CSOP iEdge S-REIT Leaders Index ETF (SGX: SRT) and Amova-StraitsTrading Asia ex Japan REIT Index ETF (SGX: CFA), or Amova-STC AREIT.

CSOP iEdge S-REIT Leaders Index ETF includes 21 S-REITs weighted by adjusted free-float market capitalization, while Amova-STC AREIT allocates 67% to S-REITs, with the rest in REITs from other Asian countries like Hong Kong and India.

Remarkably, Amova-STC AREIT is the only one eligible for investment via the CPF Investment Scheme (CPFIS).

ETFs also bypass the 35% stock limit, allowing greater flexibility after setting aside S$20,000 in your Ordinary Account (CPFOA).

Your choice of an S-REIT ETF should align with personal preferences around geographical exposure, selection methodologies, and funding sources.

Investing in individual S-REITs, however, also holds advantages, despite the clear benefits of an ETF.

Firstly, there are additional fees with ETFs beyond brokerage charges, and while an expense ratio of up to 0.60% is modest, it still cuts into returns.

Secondly, the ETF's composition may limit exposure to specific REITs or sectors you favor.

For instance, Parkway Life REIT (SGX: C2PU), a healthcare S-REIT with consistent distribution growth for 17 years, comprises only about 2% to 3% of these ETFs.

Moreover, you'll have to accept individual REITs within the ETF that you might prefer to avoid.

Lastly, investing directly in REITs affords the opportunity to engage with management at Annual General Meetings, a privilege missed with ETFs.

Ultimately, there's no need to choose between S-REIT ETFs and individual S-REITs.

Think of it as renovating your home: customize key areas like the living room or kitchen to reflect your taste, but adopt a standard layout for the rest.

Similarly, combine a broad-based S-REIT ETF with direct investments in favored individual S-REITs to tailor your portfolio.